Deeper data needed for investment insight

Many property investors know to get the different sets of data for the suburb they are analysing, but few are taking the next necessary steps, a panel of experts has revealed.

In conjunction with the Property Investment Professionals of Australia (PIPA), the peak organisation for the property industry, Smart Property Investment held a meeting of six leading minds in property investment earlier this week.

Asking the panel their thoughts about the current data available, editor of Smart Property Investment magazine, Phillip Tarrant, said: “We go to all the different property shows and we take our magazines there. Whenever anyone picks it up the first thing they do is flick straight to the back and look for the suburb they’re trying to buy in.

“They make a lot of decisions based on the median price in the back of the magazine. We try to tell them time and time again, use it as a little bit of research, but you’ve got to do everything else.”

PIPA chair, Ben Kingsley, agreed that there are substantial problems using just the data, and even not looking at the data closely enough.

“The starting point is putting the effort in to understand the different types of properties, the way in which property drivers move, the core fundamentals associated with some of that, and I’ll also say here that getting access to data is a real challenge in our space,” said Mr Kingsley.

“I see a future where we’ll see analysis being done by property type, by number of bedrooms.

“You might have one suburb that has 500 houses and the suburb next door might have 15,000. So you’re actually dealing with different types of data. I do believe where true demand and supply drivers lie, we’ll see more of that rolling out over the next three to five years.”

True analysis, he said, takes place on a level much deeper than the simple median price or clearance rate across a whole suburb.

Propertybuyer’s Rich Harvey said that it can be overwhelming for investors.

“Talking about the statistical research, there are 15,000 suburbs, there’s anywhere between 300,000 to 400,000 properties on the market at any one time. How does the average investor go and choose a property? It is all about understanding the market and knowing what to buy,” said Mr Harvey.

“Supply and demand in any suburb are driven by a range of different factors … Investors need to be aware of the macro factors, not just the micro factors. I just say to investors, they just need to do their research really well and not just believe everything they’re told.”